Around here LEO’s have little transparent dipsticks they’ll use to check truckers fuel tanks. If the little dipstick shows red, trucker is in big trouble.
I do not know how they tax it. However, commercial diesel fuel for fishing boats puts out exhaust fumes that are a different color that regular diesel for highway trucks & cars. There is no federal or state highway tax on this fuel. I believe you can also use this in your commercial farm tractors, combines, etc.
If you get caught with it in the tank of your sailboat or other personal craft it is a big fine.
Off road diesel is dyed red and moves into home heating and mining, logging, etc.
How will anyone know which gallon to tax ?
They know. Mrs. Peet works for a small regional fuel company and does taxes and suchlike accounting. Record-keeping is finnicky to say the least. You can cheat if you want, but you better be willing to do the time if you get caught...
I buy dyed diesel by the 5-gallon can for my Cub Cadet tractor. You can not use it (legally) in on-road vehicles since the (same as gasoline) tax for highway maintenence isn’t levied on dyed diesel.
Reminds me of a joke (doesn’t EVERYthing?)
[Orvill and Cooter are sittin’ on the front porch after a long day workin’ in the fields.]
Orvill: Hey, Cooter, lookey there.
Cooter: Wut?
Orvill: Ain’t them city folk siphonin’ fuel out of your Deere?
Cooter: Yep.
Orvill: Aintcha gonna do anythin’ about it?
Cooter: Nope.
Orvill: Why not?
Cooter: I wanna see how far that fancy automobile goes on deisel...